You're getting ready to make the biggest purchase of your life and you've got a lot on your mind. There are so many questions - should you insure your mortgage? Is it really necessary? What's the best way to go about it?
The key to finding the right answers is to make sure you're asking the right questions about what you need. Here are a few myths about loan insurance to get you thinking about what it means.
1. I already have life insurance, so I don't need coverage in case of death.
Start by going back to why you took out life insurance in the first place. What can this coverage do for you and your financial situation? In the event of your death, life insurance could help protect your family. When you take out a mortgage, you're taking out one of the biggest loans of your life. The additional coverage provided by loan insurance could give your family financial security. In the event of your death, your mortgage could be paid off in full.
2. I already have disability insurance, so I don't need coverage for disability.
You might be covered, but will it be enough? If you have this insurance through your employer, have you reviewed the benefits? For example, if a part or the total of the premiums are paid by your employer, the monthly benefit will be taxable. So, if you were disabled tomorrow, would money be tight?
Remember that not only will you have to cover your regular expenses with less, but your disability may create additional expenses. Your spouse might need to take time off work and you may need to pay for treatment, medication, parking, specialized transit…the list goes on. Your income shrinks while your expenses grow. Disability insurance on your mortgage could help you breathe easier by covering your loan payments.
3. I'm young and I'm healthy; I don't need insurance.
1 in 9 of Desjardins Insurances’ disability claimants is under the age of 30. Whatever your age, you likely know someone who has had a critical illness. We can't protect ourselves against everything, but the benefit of being young is that your insurance will be cheaper.
Plus, accidents happen, too. When you're young and something goes wrong, you might bounce back easier, but your wallet might not. When starting out, having insurance could help keep you from facing financial challenges.
4. Loan insurance is too expensive
Insurance is too expensive until you end up needing it. What's great about loan insurance is that your premium is never higher than it needs to be. As your mortgage balance drops, so does your premium.
If someone offers you a product for less, make sure you know what the catch is-for example, a shorter disability benefits period. Your mortgage is likely the biggest expense in your budget. If you pass on insurance, you're taking a chance if something goes wrong.
Did you know?
Loan Insurance can also help you pay any of your debts in case of a disability due to an accident or illness. Any personal or business loans taken out from a financial institution authorized to do business in Canada qualifies. Rent is also eligible. The amount of insurance can be chosen based on your specific needs.
Write to a Desjardins representative for any questions you may have about your loan insurance.
Sign up for the Desjardins Insurance TipSheet
to receive helpful financial information throughout the year!
See all articles
Desjardins Insurance refers to Desjardins Financial Security Life Assurance Company.